Day Traders Diary

8/28/13

Equity futures suggest a flat open as bulls look to end the modest two-day skid. Yesterday's weakness dropped the S&P 500 below its its 100-day moving average (1638), and bulls will surely look to retake that level over the next couple of days. However, the potential conflict with Syria poses as a potential headwind for equities as a risk premium builds in crude oil, which climbed above $112 per barrel in overnight trade before sliding back to the $110 level.

Overnight, markets across Asia were mostly lower. Majors like Japan's Nikkei (-1.5%) and Hong Kong's Hang Seng (-1.6%) saw heavy selling, but it was the Philippines PSEi (-3.0%) that was saddled with the biggest decline as action posted its lowest close of 2013. All was not bad in peripheral Asia as Indonesia's Jakarta Composite (+1.5%) rebounded after days of heavy selling. Elsewhere, India's Sensex (+0.2%) eked out a gain, after trading down as much as 3%, despite the rupee tumbling 4% to a record low of 68.93 per dollar.

In Europe, all of the major averages are lower. Germany's DAX (-1.3%) is the laggard following the disappointing GfK Consumer Climate reading (6.9 actual v. 7.1 expected). Action across the rest of the region has been rather uneventful with Italy raising EUR8.5 bln through the sale of six-month bills. The auction drew 0.886% (0.799% previous) and a 1.47x bid/cover (1.47x previous), and has yields at the front of the curve off a couple of bps.

Bringing attention back to the U.S., Treasuries are on their worst levels of the session with today's weakness producing a rise of 4.5 bps. at the long end. The benchmark 10-yr yield holds near 2.765%. Meanwhile, the Dollar Index has slipped off its best levels of the session, but remains firm as trade presses 81.40. Notable is the greenback's strength against the Australian dollar (AUDUSD -65 pips @ .8910) and the Japanese yen (USDJPY +50 pips @ 97.55). CHS, EXPR, JOY, TIVO, WTSL are names to watch following the release of their quarterly results...The following are the most important factors influencing the market this morning:

Speaking at a campaign rally in Rendsburg, German Chancellor Angela Merkel said "Greece shouldn't have been allowed into the euro" and that "Chancellor [Gerhard] Schroeder accepted Greece and weakened the Stability Pact."

SCR enters into definitive merger agreement for going private transaction pursuant to which Parent will acquire co for $4.83 per ordinary share of the co or $9.66 per ADS

WDAY is little changed in the premarket after the co beat Q2 ests, guided Q3 rev towards the high end of expectations and raised FY14 rev towards the high end of expectations; business momentum appears to be strong but the stock trades at almost 20x FY15 sales.

TIVO is % after reporting Q2 net income at the high end of the co's ($16)-(13) mln guidance, ex-items; GAAP EPS of $1.96 (including deferred tax assets) beat the GAAP consensus of $1.66; Q2 and Q3 service and technology rev were above ests and include licensing fees from CSCO/Motorola patent settlements

EXPR is +9% after reporting in-line Q2 EPS and rev with comp upside; co guided Q3 EPS in-line and raised FY14 EPS guidance (in-line); these results stand out as impressive relative to the dismal soft line retail reports we saw last week.

Upgrades: STO upgraded to Buy from Neutral at BofA/Merrill, ING hearing resumed at Outperform at Tier 1 firm, ACI resumed with a Outperform at FBR Capital, DEG upgraded to Buy from Neutral at Citigroup

Downgrades: TASR downgraded to Neutral from Overweight at JP Morgan, SRCL downgraded to Neutral from Outperform at Wedbush, TIF downgraded to Neutral from Buy at Citigroup, downgraded to Underperform from Outperform at Credit Agricole, DSW downgraded to Sell from Hold at Brean Capital

Technical factors: The solid bounce last week into Monday morning has been quickly wiped out and then some leaving the S&P down as much as 40 points (2.3%) from intraday high to low. While this has created as extended posture, the wide range bar down/close near the low is a pattern that often see some follow through before a stabilization attempt. The high TRIN close (4 month high) does argue for such a stabilization even if additional slippage is noted. The next near term support is in the 1626/1625 zone followed by 1620/1619. Resistance is at 1635/1636 and last week's low/congest (1639/1640).

Looking ahead: Pending home sales will be released at 10 am ET. Treasury will hold a $35 bln 5-yr note auction. CSTM, GES, WSM are among the names scheduled to report their quarterly results following today's closing bell while COCO, CPB, RY, TECD, TD headline tomorrow's reports due out ahead of the open.
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Stock quotes, commentary, and opinions presented in this site are for informational purposes only and should not be considered as a solicitation to buy or sell any security. Leigh Baldwin & Co., LLC does not guarantee the accuracy or completeness of the information or make any warranties regarding results from its usage.